It’s that time of year again. No, I’m not talking about the holiday season. Rather, it’s the time of year when business owners all over the country are making end-of-year decisions to anticipate and plan for next year.
Part of that “taking stock” of your business includes what kind of investments for the future you need to make. Now’s the time many businesses have a good idea how the year’s going to wind up, and they know what they can afford to invest back into the business. Investments in shop floor machinery, personnel, office equipment – the list goes on.
One of best investments you can make is in an shop management software program to streamline your business. And, like the tax credits for energy-saving home improvements, there’s a provision out there to allow you to write off your job shop software investment.
If you sit down with your accountant around this time of year, he or she will likely mention Section 179. It’s the section of the tax code that defines business purchases that qualify as eligible deductions. You’re probably familiar with the concept even if you’re not familiar with the exact code.
Have you ever bought a piece of equipment or property at the end of the year so you could deduct it on your tax return? If so, you’ve likely taken advantage of section 179. When most people think about this strategy, they usually only consider tangible goods or materials.
Section 179 isn’t just limited to physical goods, though. It also applies to software. According to the tax code, a business can deduct the purchase of software as long as the software is readily available to the public, is subject to a nonexclusive license, and hasn’t been significantly modified. Also, the business must put the software into use in the year in which the deduction is taken.
How much you can deduct depends, of course, on what your accountant can justify, but this handy calculator will at least give you an idea of the tax benefits. E2 and many other job shop software qualifies for Sec. 179.
In fact, the fourth quarter is traditionally a very busy time for Shoptech as shops across the country race to take advantage of year-end planning (and this deduction).
While a lucrative tax break is certainly not the main reason to purchase an ERP software package for your shop, many shop owners buy now to so they get the system up and running by the start of the new year. Plus. they have money in the budget now. Money is set aside, so it’s a use it or lose it.
Whether you’re thinking of switching or considering using software package for the first time, most providers can help you get your system implemented quickly so it’s in use by the end of the year. That way you can claim it on your taxes and take advantage of the Section 179 deduction.
If your shop needs a more-organized process, now could be a good time to get started with a job shop software solution. You can streamline your shop’s workflow and get a tax deduction on top of it. Talk to your accountant about Section 179 and how you can take advantage.